BPI expects 15% profit hike

MANILA, Philippines - Ayala-led Bank of the Philippine Islands (BPI) said it expects to post an income growth rate of 15 percent this year, particularly as the May national elections and political transition proceed smoothly.

The bank recorded a net income of P8.5 billion in 2009, 32.8 percent better than the P6.4 billion in 2008. A 15-percent growth in net income in 2010 is equivalent to roughly P9.7 billion, just P300 million short of the record P10 billion net earnings registered in 2007.

BPI said it is basing its optimistic forecast to bullish growth prospects for the Philippines and the rest of Asia. Forecasts by the Asian Development Bank (ADB) and the World Bank pointed to economic growth for the Philippines at close to four percent and for Asia at nearly 10 percent. China, which has been leading the march of East Asia and the rest of the world, registered an impressive economic growth of 11.9 percent in the first three months of 2010.

BPI president and chief executive Aurelio Montinola lll said that their lending portfolio could have grown by another 10 to 15 percent in the January to March period this year.

Lending to the small and medium enterprises (SME) and consumer sectors are expected to expand by 15 percent, while the top-tier and large corporate borrowing sector will remain relatively dormant.

The top-tier and corporates are either extremely liquid, or have easy access to the capital markets, Montinola said.

He added while the SME sector is generally on the expansion mode, the general sentiment is that all commitments for loans are dependent on the outcome of the elections.

BPI Family Savings Bank president Alfonso L. Salcedo Jr. said they have a large number of SME borrowers that have made loans but have not drawn on the portfolio. “Wait-and-see attitude in relation to the elections is the prevailing sentiment,” he noted.

Meanwhile, Montinola said the bank does not need to tap the capital markets as its total assets stood at over P713 billion. “The bank can go all the way to 2012 (without looking for money), and still retain a capital adequacy ratio (CAR) of over 14 percent,” he added.

Montinola said as long as its lending continues to grow by double digits, the commercial bank of the Ayala Group of Companies will not have to tap the capital markets for funds. Rather, the commercial bank will continue to diversify and to look for more alternative channels for growth and profit.